BCA

From: World Advertising Research Center (WARC)

 A new breed of “social consumer” means US brand owners need to transform customer relationship management models, a report from consultancy Booz & Company has argued.

“The days of the one-to-one relationship between companies and their customers are over,” the company’s study said.

“Now companies must contend with the huge and growing social web, where customer experiences and opinions are shared on a massive scale, and corporate reputations can be ruined almost instantaneously.”

As nearly 75% of online adults engage in Web 2.0 pastimes like contributing to forums and writing product reviews, the necessity for action is pressing.

Similarly, approximately 25% of America’s internet audience create content including video, blogs and audio material, and a third of bloggers express their attitudes about goods and services.

Embracing tools for interacting

The resultant challenges facing marketers incorporate embracing tools for interacting with shoppers, ensuring transparency and pursuing collaboration across a range of fields.

“This new relationship will have two goals: to develop the credibility needed in the social web and to use this web to boost sales,” Booz & Co said.

Among the “reactive” competencies to be addressed in protecting the bottom line are public relations, complaints management, customer support and gathering insights.

Equally, “proactive” functions – for example lead generation, sales, marketing, promotions, loyalty programmes and awareness-building – may all be achieved using sites like Facebook and Twitter.

Oil giant BP was named as one organisation that failed to embark on such activities, and thus lacked any “social web credibility” before the Gulf of Mexico crisis, meaning attempts to mitigate the fallout proved largely unsuccessful.

More positively, IT specialist Dell has used Twitter to push unique offers, and also forged a partnership with Intel on a scheme called “Dell Swarm”.

Dell used collective buying utilised by Groupon

Under the auspice of this platform, Dell leveraged the collective buying ethos utilised by Groupon, and reduced prices as the size of the buyer “swarm” built up over social networks increased.

“Dell sold out the inventories allotted to the campaign, taking in more than $6.5 million in incremental revenues,” Booz & Co said.

Additionally, 200 blogs and 500 tweets praised this effort, enhancing brand equity, as prequalified leads rose 15% and 80% of participants opted-in to receive future communications.

Best Buy formed an online community

Elsewhere, electronics retailer Best Buy formed an online community via which consumers respond to questions posted by their peers, while the firm’s 114,000 staff can solve unanswered queries.

This digital hub also houses bespoke pages prior to the launch of high-interest products, such as the iPhone.

In 2009, this property secured 2.5m visitors, reading 80m messages, and Best Buy’s employees only had to deal with 5% of enquiries.

Complaint levels fell 20%, and the cost savings provided by this and parallel social initiatives are estimated to have reached $5 million.

Seaworld is an example of how to handle negative coverage

Booz & Co further suggested that SeaWorld showed how to handle potentially negative coverage after a trainer was killed by killer whale in front of a live crowd in early 2010.

It immediately made posts to Twitter and Facebook, the company’s chief executive had composed a blog piece in hours, which was left open for comments to be added, and tribute videos were soon uploaded to YouTube.

“A rising tide of comments on Facebook advocating the closing of the theme park and freeing the whales was countered primarily by thousands of SeaWorld Facebook fans,” Booz & Co said.

“At present, thanks to its rapid and sympathetic response, SeaWorld’s theme part operations are continuing normally.”

Data sourced from Booz & Co; additional content by Warc staff, 2 May 2011

From: e-Marketer

 For complete data charts and story, go to e-marketer.com

From: World Advertising Research Center (WARC)

Apple’s iPhone is the highest-scoring mobile device in terms of US customer satisfaction, a result attributed to the “powerful features” and “positive experience” it provides.

JD Power and Associates polled 7,275 smartphone owners and 11,347 adults possessing feature phones, converting the findings into an overall index ranking based on a 1,000-point scale.

Apple led the smartphone charts for the fifth successive year, posting 795 points, largely thanks to its ease of use, appearance and functionality.

Motorola took second, registering 763 points, followed by HTC, only slightly behind after delivering 762 points.

Among less advanced appliances, Sanyo topped the table with 715 points, credited for the attractiveness of its handsets, long battery life and usability.

LG claimed second in this category, yielding 711 points, and Samsung occupied third, having accrued 703 points from the relevant sample.

Where smartphone subscribers logged on to portals like Facebook and Twitter, average satisfaction ratings reached 783 points, some 22 points ahead of their counterparts not engaging in the same pastime.

A majority of this audience have utilised social media through this route, measured against 9% of feature phone respondents, and these groups posted satisfaction scores of 754 points and 696 points respectively.

Smartphone users access social media more frequently

“It’s not unexpected that smartphone owners access social media sites from their device more frequently than traditional mobile phone owners,” Kirk Parsons, senior director of wireless services at JD Power and Associates, said.

“However, these findings demonstrate that equipping devices with powerful features and service is key to creating positive customer experiences with wireless devices.”

People visiting Web 2.0 platforms in this fashion make calls, send texts, purchase additional services, and spread favourable word of mouth for their brand with the greatest regularity.

Positive experience is critical ingredient

“The critical ingredient is whether the user has a positive experience with the wireless device itself,” Parsons added.

“Providing features that facilitate social networking activity and make it easy for users to communicate and share information between various social media sites may be an effective way for service providers to further engage customers and increase loyalty.”

Usability was the main driver of satisfaction for both the smartphone and feature phone communities, receiving 26% and 30% from these two populations in turn.

Design secured 23% and 30% respectively, and functionality was mentioned by around a fifth of each panel.

The smartphone cohort also emphasised operating systems, and battery life assumed particular importance on feature phones.

Average price of smartphone has declined

Elsewhere, the study reported that the average price of a feature phone has declined from $81  in early 2009 to $73 in 2011, primarily due to discounts and incentives supplied by manufacturers and networks.

Two-thirds of smartphone subscribers had downloaded gaming and social networking apps, and 54% had obtained maps and weather tools, standing at 53% for “entertainment-orientated” offerings.

Contributors owning their handset for under a year lodged a typical score of 773 points, falling to 728 points when they had kept one device across a longer time period.

Data sourced from JD Power and Associates; additional content by Warc staff21 March 2011

From: World Advertising Research Center (WARC)

 A “new breed” of marketer is required to meet the challenges of the globalised and digitally-connected world, possessing skills covering everything from strategy to robust measurement.
Industry body, the Chief Marketing Officer (CMO) Council – boasting 6,000 members, from 110 countries and handling $200bn in spending a year – tracks the latest trends influencing communications professionals.

“Today’s cmo is someone who is measured by their ability to deliver results,”

 Donovan Neale-May, the CMO Council’s executive director, told the Financial Times. It’s not about the brand, it’s more about revenues and yield and value, and how you optimise those through technology, new organisational structures, and metrics.”

Neale-May suggested core competencies now extend to establishing strategic priorities, engaging consumers and proving ROI, functions demanding attention in several nations simultaneously. Today, it’s a much more globalised market, so an international background helps,” he said.

A unified proposition for every client

Salesforce, the customer relationship management specialist, has tailored its approach to suit various outlets, but also focuses on a unified proposition applicable for every client.
In Japan, our number two market, they are using a different range of products from their US counterparts,” said Kendall Collins, the firm’s chief marketing officer.

“There are a lot of nuances when you think about managing a global team, but at the end of the day, you are working to create a consistent message across your brand.”

Our mix has changed enormously over the past five years

Such adaptability plays an equally vital role when it comes to exploiting emerging technological developments, from social networks like Facebook and Twitter to Apple’s iPhone and iPad.
“Our mix has changed enormously over the past five years towards the web, digital and social media,” said Tony Palmer, chief marketing officer of Kimberly-Clark, owner of Huggies and Kleenex.

Despite this fluctuating environment, the overarching aim underpinning all campaigns remains constant, he added. We define marketing as the object of selling more stuff to more people for more money more often,” said Palmer.

You need to forge strong internal partnerships

Although many marketers bemoan the absence of formal board-level recognition, Palmer argued that the target should be to forge strong internal partnerships. People talk a lot about needing to have the chief executive back you, but I’ll take a counter view,” he said. “It’s important, but no more important than that of a group president has the support of their chief executive. The important thing is to have the confidence of your peers, so they see you as a partner.”

Jim Farley, Ford’s chief marketing officer, stated agreement on corporate, and communications, goals are essential components of the automaker’s revival, led by chief executive Alan Mulally.
“As soon as I met Alan, I understood his vision for the company,” he said.

“We both feel the same about including everyone. We included the dealers in the brand campaign, the creative, and the tag line. Both of us approach work the same way.”

Data storage provider EMC operates in a sector which has seen substantial innovation and competition during the last few years. “These days [chief marketing officers] are under pressure to justify their existence,” Jeremy Burton, EMC’s cmo, said.

Now marketing is as much a science as an art

“If you go back 10 or 15 years, marketing was very much an art. It was about sitting down with an agency and creating a Zen environment to create the brand image.” These days, marketing is as much a science as an art.”

Lisa Arthur, cmo of software firm Aprimo, thus asserted a “new breed” of marketer is necessary.
“We’ve reached a point where we need a new breed of marketing innovator, someone who is not only tech-savvy, but also a true business leader,” she said. 

Data sourced from Financial Times/Forbes; additional content by Warc staff, 18 March 2011

From: World Advertising Research Center

Many major brand owners are seeking to adapt their marketing structures, in reflection of the changing consumer and media climate.
Research firm Forrester surveyed 100 senior communications executives in the US, and found 75% of this panel intend to recalibrate existing models during 2011.

“It’s almost like a reality check went off within marketing leadership, where they realised they can’t be the brand of the future through yesterday’s organisation,” Chris Stutzman, a principal analyst at Forrester, told Marketing Week.

“There are a lot of driving forces behind this change, including the consumer having more control. Technology means you can now build your brand in ways you could have never imagined.”

The key issues that need to be addressed, Stutzman suggested, incorporate removing internal barriers between different disciplines, and focusing on unifying goals.

Ensuring top-level involvement with platforms such as Twitter, setting aside meaningful funds for experimentation, and paying genuine attention to the customer experience are further essential objectives.

Staff to monitor social media buzz

PepsiCo’s Gatorade has demonstrated the power of this process, establishing a “Mission Control”, manned by in-house experts and staff from agency partners, to constantly monitor social media buzz.

“Before, we had a marketing communications department, or a PR department, pushing out strategy for all our products, no matter who the target was,” said William Morris, a director at Gatorade.

“Now we have teams associated with each product line looking at how people engage with the products.”

He added: “These conversations in turn will influence where the brand goes in terms of new product development and its communications.”

Soft drinks giant Coca-Cola also undertook a transformation exercise in 2010, appointing Ivan Pollard, previously at Naked Communications, to the position of vice president, global connections.

Executive roles change

This formed part of a wider approach, as several leading executives saw modifications to their roles, with a particular preference towards three areas: “content”, “connections” and “integrations”.

“It’s recognition of a shift in the landscape,” Wendy Clark, Coca-Cola’s svp, integrated marketing communications and capabilities, argued.

“Increasingly, we understand the idea of a liquid and linked landscape. And perhaps we weren’t structured for ultimate success within that landscape.”

InterContinental Hotels Group is revising its operating principles, anticipating the evolution of the trading environment.

Big change is in owned media

“The big change for us has been to stop focusing on just the paid-for media on the plan and instead create a kind of schedule of all the owned media we have and then build out what media we could earn,” Tom Seddon, IHG’s chief marketing officer, argued.

“Social is very fast changing and our general attitude is one of experimentation. I don’t think anyone has the magic formula yet, but we encourage experimentation and just keep trying to find things that work.”

Epson America, the printer company, is also forging stronger bonds between its various units, according to Chris Nickel, the organisation’s manager for CRM and direct response.

“My team, the marcoms group, PR and the advertising group are all together when products launch so we will all have a common goal,” he said.

Big cultural shift

“But it’s taken a cultural shift in the company to say ‘hey, all of you silo groups are all one team, so let’s get together.’”

Glenn Murphy, chief executive officer of Gap, revealed last month that the retailer wanted to press rapidly forward into the new media space.

“When you’re going to do it, you got to do it right and you’ve got to get partnerships and you’ve got to lead the way,” he said.

“And I know our marketing teams quite well here, and I think they’re taking up that challenge. And they’re got to take it on head on in 2011.”

Data sourced from Marketing Week; additional content by Warc staff11 March 2011

From: World Advertising Research Center (WARC)

Brand owners must confront the “consumption dilemma” that threatens their long-term growth prospects, Deloitte has argued.

The consultancy suggested several megatrends currently at work around the world – especially the emergence of a new middle class in developing nations – are radically reshaping the trading climate.

“Even as economic disparities between countries and within countries increase, and even as the bottom billion risks being left behind, globalisation has created new markets and new consumers,” the company stated.

Global population expansion biggest problemPerhaps the largest challenge is the expansion of the global population, set to reach 9bn people in 2050, measured against 7bn at present.

“As it stands, humanity’s ecological footprint is 50% greater than earth’s capacity to support it. Unchecked, humanity’s ecological footprint could rise by a further third by 2030,” Deloitte said.

“To decouple consumption from natural resource use and environmental degradation, we need to purposefully decouple narrow concepts of GDP growth from broader qualitative objectives: prosperity and well-being.”

Unilever, the FMCG specialist, has outlined plans to achieve just this goal, announcing a range of targets enhancing its sustainability performance.

Shoppers encouraged to change behavior

These incorporate initiatives such as sourcing materials like palm oil in ethical ways, and encouraging shoppers to pursue more environmentally-conscious forms of behaviour.

“As a ceo, if you want to plan for success, you need to decouple your growth strategy from your environmental impact,” said Paul Polman, chief executive of Unilever.

Retailer Carrefour has championed similar activity, attempting to cut energy consumption by 30% between 2004 and 2020, alongside stimulating customers to “adopt responsible habits”.

The hypermarket operator also now holds annual awards recognising suppliers that have made headway in areas in keeping with its own priorities, like “managing waste” and “practicing social responsibility”.

We  must make the aspirational attainable

“We must make the aspirational attainable, the attainable sustainable, and the sustainable affordable,” Lars Olofsson, Carrefour’s chief executive, said.

Sportswear manufacturer Nike was an early-mover in this field, and recently founded the GreenXchange, a digital platform sharing information about eco-friendly technology, saving duplication and spreading best practice.

“Our greatest potential will come from embracing sustainable consumption as an opportunity to collaborate on solutions that will leap frog us into the future,” said Mark Parker, Nike’s chief executive.

Online search giant Yahoo and electronics chain Best Buy were among Nike’s allies in this venture, and Brain Dunn, the latter firm’s chief executive, asserted inaction was no longer an option. “In an increasingly connected world, we have a responsibility to lead our industry by bringing various stakeholders together to develop sustainable solutions that benefit consumers around the globe,” he said.

Advertising and marketing to play a key role

Sir Martin Sorrell, WPP Group’s chief executive, equally advised advertising and marketing, so often painted as a villain of the piece, should play a central role.

“In the public mind, marketing and communications skills are naturally most associated with the encouragement of consumer consumption. But they’ve also proved their worth many times over in the promotion of public services,” he said.

“As the need for our planet to graduate from super consumption to sustainable consumption becomes ever more urgent, marketing skills will be key in persuading the world of the resulting benefits – to both individuals and society as a whole.”

Deloitte’s analysis supported Sorrell’s perspective, arguing 70% of weekly transactions are typically “repeat purchases with little or no conscious consideration of alternatives.”

As such, it suggested engaging shoppers in new ways, from leveraging social media to utilising co-creation in generating goods and services, and rethinking the in-store environment to promote positive habits, are all vital.

Data sourced from Deloitte; additional content by Warc staff25 February 2011

From: World Advertising Research Center

Creating customer “excitement”, rather than maintaining ”satisfaction”, should be the key aim for marketers, McKinsey has suggested.

In a new report, the consultancy claimed satisfaction is useful for retaining consumers already loyal to a product or service, but that excitement is needed to attract new customers or encourage shoppers to pay a premium.

The study defined consumer excitement as “the feeling of experiencing something unexpectedly positive”.

“Companies that want to acquire customers for the long haul must surprise, thrill, and captivate them,” it added.

Excitment builds value

“Customer excitement creates immediate value because it gets customers talking about products and increases their willingness to buy and pay higher prices … marketing experts need to understand and channel these supposedly random occurrences and set up a process for systematically producing excitement.”

McKinsey claimed that selecting the correct market research techniques is a crucial part of this strategy.

For example, customer sentiment might not be most usefully gauged by gathering as much data as possible and then looking for average responses.

Excitement occurs at outlier points

“Customer excitement … always occurs at outlier points and is not found in standard quantitative measurements,” the report stated.

“It is therefore recommended to use new techniques and metrics that enable the tracking and assessing of emotions, such as capturing sentiments in social networks.”

Case studies cited by McKinsey as evidence for this view included that of Fiat, which successfully launched its Fiat 500 model in 2007 through a “big bang” campaign which resulted in a “huge wave” of customer excitement.

Fiat price 30% higherAs a result, the Italian carmaker was able to charge as much as 30% more for the Fiat 500 than rivals in the same category.

Tipp-Ex was also praised for creating “wow effects” thanks to its viral “A hunter shoots a bear” video, spread via YouTube.

The spot generated 10m hits soon after launch and “massive” word of mouth on social media platforms, blogs and online forums.

Data sourced from McKinsey; additional content by Warc staff15 February 2011

From: e-Marketer

People like me” vs. the experts

Social media has put power in the hands of the consumer, giving everyone a publishing platform to push out their thoughts and feelings to the world at large. This has given great power to word-of-mouth, typically considered the most trustworthy form of marketing. But social behavior is changing as it matures.

The GlobalWebIndex “Annual Report 2011,” which includes data from Trendstream and Lightspeed Research, outlines a shift in consumer behavior on social media. As usage of social sites increases around the world, the landscape is maturing. According to the report, usage is shifting to focus on distributing content rather than creating it. Social media users disseminate and share professionally created content more often on microblogs, social networks and video-sharing platforms.

But the human element remains key to engendering trust. Internet users worldwide reported a nearly 50% increase in their trust of social network contacts giving product recommendations, and a 21% increase for microblog contacts. Even though many of those contacts are likely sharing some professional content with or alongside their personal recommendations, professional sources of information like newspapers and TV barely gained any trust over the same period.

Confidence rises in trust of experts

But Edelman’s “Trust Barometer” report for 2011 shows, for the second year in a row, an apparent decline in trust of a “person like me” (from 47% in 2009 to 43% in 2011) and a concomitant rise in trust for experts.

That survey polled college-educated consumers ages 25 to 64 who are in the top 25% of household income relative to age group in their home country and who follow business news and public policy. The opinions of such an affluent, highly educated, highly informed group cannot be extended to the general population.

Query focuses on consumer issues

Further, Edelman asked about trust in “information about a company,” a different query than product or brand recommendations. The inclusion of answer choices like “a financial or industry analyst” or “government official” orients the question more toward investor than consumer issues.

Other research tends to support the traditional view that word-of-mouth from friends, family and other peers is still the most trustworthy way of getting information about products and services. Teen influencers told Ketchum in May that friends with their top source of information. The importance and trustworthiness of customer reviews has grown, especially when shoppers feel they are authentic peer opinions. And social media users say dialogue and comment quality are key to trust on social sites. They’re also even more likely than the average consumer to place trust in friend and family product recommendations.